Residual interest rules will lead to higher clearing costs

Cost plus

Diana Shapiro

US regulators have taken a number of steps to improve the protection given to client margin over the past two years, in part driven by the events at MF Global and Peregrine Financial Group, where customer funds were apparently misused. Central to the changes are rules on so-called residual interest – a buffer contributed by US futures commission merchants (FCMs) to cover any shortfall in client margin. The concept has existed for some time, but the new rules – in combination – will dramatically

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